PERSONAL AND CORPORATE
Ethics
Ethics
A set of moral principles or values that govern behavior.
What is right and wrong? What are your personal ethics?
Ethics
All individuals develop their own set of ethical rules Which helps them decide how to behave in different
situations
Like individuals, businesses develop ethics to help them determine what actions are appropriate and fair among employees.
The Golden Rule
One should treat others as one would like others to treat oneself (positive form)
One should not treat others in ways that one would not like to be treated (negative/prohibitive form, also called the Silver Rule)
Hippocratic Oath
The Hippocratic Oath is an oath historically taken by doctors swearing to practice medicine ethically
Code of Ethics
A document that outlines the principles of conduct to be used in making decisions within the organization.
Given to all employees Most all companies in the U.S. have a code of ethics.
Code of Ethics
Common Content1. Honesty2. Adherence to the Law3. Product Safety and Quality4. Health and Safety in the workplace5. Conflicts of Interest6. Employment practices7. Selling and Marketing Practices8. Financial Reporting9. Pricing, Billing, and Contracting10. Using Confidential Information11. Acquiring and using information about competitiors12. Security13. Payments to obtain business14. Protection of the Environment
Code of Ethics
Establishing a code of ethics does not prevent unethical behavior
The Code MUST BE ENFORCED!!!!! Companies must discipline employees that violate the
Code of Ethics
Ethics PRO’s and CON’s
PRO’s Helps employees gain the trust of the people with
whom they work Helps businesses gain the trust of customers,
suppliers, etc… with which they deal withCON’s
Cause a company to lose money due to lawsuits or lost business
Can result in a personal demotion or termination from the organization
Classroom Code of Ethics
What are the Code of Ethics to be followed in the classroom?
Students should create a 14 item Code of Ethics that will apply to all students who take this Course. The 14 items should follow the common contents of the previous slides. The best Code of Ethics will be printed and placed on the wall.
Enron Corporation
In 2001, the Enron Corporation, one of the world’s largest traders in gas, electricity, and related commodities, collapsed in scandal and declared bankruptcy. Enron was accused of crimes including deceiving investors, inflating profits, and hiding debts.
Arthur Anderson, the companies accounting firm was later convicted of obstructing justice by shredding documents related to its work on Enron’s accounting.
Enron Corporation
WorldCom, then the world’s second largest long-distance provider, suffered the largest bankruptcy in American history after it revealed that it had improperly booked over $7 million in earnings.
As a result of these high-profile scandals and to shore up faith in the American Economy, President Bush signed the Sarbanes-Oxley Act of 2002.
Sarbanes-Oxley Act of 2002
Act containing important rules affecting the reporting and corporate governance of public companies and their directors and officers.
Major provisions: Require CEO and CFO to certify periodical reports
filed with the SEC Prohibits most loans to directors and executive
officers. Forces company insiders to report changes in
ownership within two days after a transaction has been executed.
Ethics
Some ethical violations are clear cut in the workplace Stealing money or supplies Lying about hours worked (stealing hours) Falsifying records
Employee Theft
Employers trust their employees not to steal from them. Ethical employees do not violate that trust
Unethical employees steal in many different ways Embezzle money Steal supplies or inventory Accept bribes Submit false expense reports
Lying About Hours Worked
Ethical employees are honest about hours worked. Working from home or sales from the road require
ethical reporting since managers cannot check to see them working.
Ethical employees show up to work unless they are ill or forced to miss for a legitimate reason. They do not pretend to be sick or just lay out of work
for no reason. This results in no accountability in the workplace
Falsifying Records
One of the most ethical collapses an employee can commit!!!
This may cause massive damage to a companies reputation
Years of excellent performance can be wiped out due to unethical actions.
Laws Relating To Ethics in Business
Laws relating to: Competitive behavior Consumer protection Product safety Environmental protection
Competitive Behavior
The federal gov. makes sure companies don’t engage in anticompetitive behavior
All companies must abide by these laws
Laws enforced by the: FTC (Federal Trade Commission) Antitrust Division of the Department of Justice
Competitive Behavior
3 laws: The Sherman Act The Clayton Act The Wheeler-Lea Act
Competitive Behavior
The Sherman Antitrust Act of 1890
Made it illegal for companies to monopolize trade
Company mergers may be prohibited if the result of the merger gives too large of a share of the market
Purpose of law is to ensure companies can compete fairly
Competitive Behavior
The Clayton Act of 1914
Made it illegal to charge different prices to different wholesale customers.
Also banned the practice of requiring a customer to buy a second product.
Competitive Behavior
The Wheeler-Lea Act of 1938
Banned all unfair or deceptive acts or practices like false advertising
Required businesses to notify customers of any possible negative consequences of using their product
Consumer Protection
Laws protect consumers in the United States against unethical and unsafe business practices
These laws cover: Food and Drug Consumer Products Loans
Food and Drug
The Federal Food, Drug, and Cosmetic Act of 1938 bans the sale of impure, improperly labeled, falsely guaranteed, and unhealthy foods, drugs, and cosmetics.
This law is enforced by the FDA (Food and Drug Administration) FDA has the power to force manufacturers to stop
selling products it considers unsafe
Consumer Products
The CPSC was established in 1972 The Consumer Product Safety Commission
It established minimum product safety standards on consumer products
The CPSC has the authority to force manufacturers to recall any product found to be defective
Loans
Laws that protect consumers from unfair lending practices are:
The Truth-In-Lending Act of 1968 The Equal Credit Opportunity Act of 1975
Loans
Truth-In-Lending Act of 1968 Requires the lender to disclose in writing the APR
(Annual Percentage Rate), and all finance and interest charges over the course of the loan.
The Equal Credit Opportunity Act of 1975 Creates equal chances for all consumers to receive a
line of credit. Makes it illegal to make credit approval decisions
based on any discriminatory practice.
Environmental Protection
Environmental Protection has been an important social and economic issue in the U.S. since the 1960’s
This issue led to these laws designed to protect the environment. The National Environmental Policy Act of 1969 The Clean Air Act of 1970 The Toxic Substance Control Act of 1976 The Clean Water Act of 1977
The National Environmental Policy Act of 1969
Was the key piece to the environmental protection movement of the 1960’s
Created the EPA Environmental Protection Agency
Mission is to protect humans health and safeguard the air, water, and land.
The EPA enforces all of the following laws
The Clean Air Act of 1970
The federal law that regulates air emissionsSet maximum air pollution standards in for
each of the 50 states.
In 1990, the act was amended to deal with new problems: Acid Rain Ground-Level Ozone Stratospheric Ozone Depletion Toxic substances in the air
The Toxic Substances Control Act of 1976
Act gave the EPA the authority to track all industrial chemicals produced in, or imported into the U.S.
EPA screens all industrial chemicals and can require periodical reporting or testing of those that may be dangerous to humans or the environment.
The Clean Water Act of 1977
Act gives the EPA authority to prevent industries from discharging pollutants into bodies of water without a permit
Law makes it illegal to dump chemicals or pollutants into bodies of water unless a permit is granted
Environmental Protection
Which laws govern the environment?
What was the key piece of legislation in the environmental protection movement?
Which decade did the Environmental protection movement begin?
Ethical Standards
Standards of Business Ethics are different around the world
Business Managers must be aware of these different ethical standards when working in foreign countries
Ethical Standards
Gift Giving Some cultures expect a gift. Failure to give is
considered an insult. In Japan, gifts are important part of doing business,
usually exchanged at the first meeting
In the U.S. Government officials are not allowed to accept gifts from businesses.
Intellectual Property
Ownership of ideas, such as inventions, books, movies, and computer programs
In the U.S. creators of intellectual property have the exclusive right to market and sell their work.
Intellectual Property
These rights are protected by: Patents Trademarks Copyright laws
These laws guarantee only the creator profits from the idea
In 1999, the Justice Department, FBI, and Customs Services began cracking down on piracy and counterfeiting
Intellectual Property
China and India do not enforce these rights Chinese copy and sell foreign computer programs and
pirate newly released movies Publishers in India reprint foreign textbooks
In the U.S. these people would be guilty of PLAGARISM and will be sued in a court of law
Intellectual Property
A manager must know the culture of the countries they do business in.
Intellectual property laws must be respected and followed in the U.S.